GBP-SGD Trading

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GBPSGD is the ticker symbol for the British pound to Singapore dollar exchange rate on the forex markets. GBPSGD is an exotic currency pair because one of its constituent currencies is that of an emerging nation, Singapore. Exotic currency pairs are typically characterized by low trading volumes, overall illiquidity, and relatively choppy price action. They are also usually traded with relatively wider spreads than major or minor currency pairs.

In the GBPSGD Forex rate, the GBP is the base currency, while the SGD is the quote currency. As such, the price of GBPSGD at any given time represents the amount of Singapore dollars it would take to exchange for one unit of the pound sterling (1 GBP to SGD).

History of GBPSGD

The pound sterling is the official currency of the United Kingdom, the British Overseas Territories, and the UK Crown Dependencies. There are also at least 8 countries around the world that have pegged their national currencies to the pound sterling. GBP is currently (as of February 2022) the 4^th most used currency in the world, and alongside the US dollar, euro, Chinese yuan, and Japanese yen, it constitutes the basket of currencies that determine the value of IMF SDR (Special Drawing Rights).

The GBP is the oldest currency in the world, having been in circulation as early as 775AD. The British Empire’s conquests around the world in the 17^th, 18^th, 19^th centuries helped establish the GBP as the world reserve currency. In the 20^th century though, the UK’s engagement in two World Wars and the rise of the US saw the GBP lose its prestigious status. The 20^th century was very eventful for the GBP, with the currency pegged to the Gold Standard and the US dollar at different times, before becoming freely floated in the market. In the 21^st century, the UK notably did not adopt the EU-backed euro, and in 2016, its public voted to exit the European Union altogether.

The Singapore dollar (SGD) is the official currency of the Island Republic of Singapore. The SGD was introduced in 1967, two years after Singapore gained independence from Malaysia. The SGD replaced both the Malayan dollar and British Borneo dollar that were used within the monetary union of Singapore, Malaysia, and Brunei. At introduction, the SGD was briefly pegged to the pound sterling, and then the US dollar. Following the collapse of the Bretton Woods System in the early 1970s, the SGD became pegged to a basket of foreign currencies until 1985. It has since been allowed to float freely within an undisclosed band by the Monetary Authority of Singapore.

The SGD has earned respect in the Forex markets as one of the most stable and important currencies. Singapore has a unique location and is home to the second-busiest port by cargo tonnage. The country has consistently ranked as the most open place for doing business and has also risen to become the wealth management capital of Asia. The Singapore dollar is currently the 12^th most traded currency in the world; but in Asia, it is the 3^rd most traded, behind only the Japanese yen and Chinese yuan.

GBPSGD Historical Performance

The GBP to SGD traded around 2.75 at the turn of the millennium. It gradually drifted upwards and sustained around the 3.00-handle until mid-2007. The effects of the 2007/8 Great Recession inspired demand for the Singapore dollar, with the GBPSGD embarking on a long-term downtrend to below 2.00 by mid-2011. There was a brief recovery though, but in recent years, the GBPSGD has traded within the 1.66-1.89 range.

Major Bodies Influencing the GBPSGD – GBPSGD Trading

Here are some factors to look out for when engaging in GBP SGD trading:

Monetary Authority of Singapore (MAS)

The Monetary Authority of Singapore serves as both the central bank and financial regulatory authority of Singapore. Its stated mandate is to promote non-inflationary sustained economic growth as well as to create a sound and progressive financial centre. The MAS reviews its policy stance twice a year, which is significantly less frequent than other major central banks around the world. The MAS manages the value of the SGD by allowing it to trade within a band determined by an undisclosed basket of multiple foreign currencies. The MAS does not set interest rates like other central banks, preferring instead to intervene in the forex or other money markets directly.

Bank of England (BoE)

The BoE is the central bank of the United Kingdom. It is the single body with the biggest influence on the value of the pound sterling. The BoE has the mandate of promoting financial and monetary stability within the nation. It releases the bank rate as well as the accompanying monetary policy statement every month. In recent years, the BoE has been very active in targeting inflation as well as implementing quantitative easing programs.

Singapore Department of Statistics (DOS)

The DOS is the national statistics office of Singapore. Its mandate is to collect, compile, analyze and publish important statistics about the economy, population, and life in Singapore. Some of its most important indicators that can influence the value of the SGD include the Consumer Price Index, Total Merchandise Trade, Index of Industrial Production, and the GDP.

GBPSGD Correlations

Having a view of currency pair correlations can help traders identify opportunities in related pairs as well as avoid accumulating more risk in a portfolio. GBP SGD has positive correlations with currency pairs such as the GBPUSD, GBPJPY, CADJPY, NOKJPY, and CHFJPY. GBPSGD also has negative correlations with currency pairs such as the USDMXN, USDCAD, USDNOK, EURGBP, and USDPLN.